5.  The applicant company was established in 1993 and has its registered office in Opava (the Czech Republic).
6.  The present application concerns claims against a Slovak gas company (“the defendant”) dating back to 1998 when the defendant was still a State‑owned enterprise and when its director and statutory representative was Mr J.D. It came to light subsequently that, at the time, Mr J.D. had issued a number of promissory notes (vlastná zmenka) in the name of the defendant for large amounts of money (see Michaela Huserová, Administrator in Bankruptcy of Union banka, a.s. in liquidation and Stroden Management Limited v. Slovakia (dec.), no. 760/04, 9 November 2010).
7.  Prior to becoming the statutory representative of the defendant, Mr J.D. had served a term as Minister of Industry and two terms as Minister of the Economy. In 1999 he was murdered in circumstances that are yet to be clarified.
8.  The promissory notes have always been contested by the defendant. Nevertheless, they have been negotiated among many parties and have given rise to a deal of litigation, including the proceedings in the present case. They have also attracted extensive media attention.
9.  In 2001, the defendant was transformed into a joint‑stock company. It then underwent privatisation and 49% of its shares were sold to private foreign investors.
10.  The contract for the privatisation of the defendant contains a clause pursuant to which the State agreed to indemnify the investors for any loss they might incur on account of the promissory notes signed by Mr J.D.
11.  Of relevance for the present application is the fact that at the time, 51 % of the defendant’s shares were held by the State, while the remaining 49 % were held by a private party.
At present, the defendant is wholly owned by the State.
12.  On 23 December 2005 the applicant company instituted proceedings against the defendant before the Bratislava V District Court (Okresný súd). Then and at all stages of the proceedings, it was represented by a lawyer.
The applicant company relied on a promissory note for the payment of the equivalent of some 11,350,000 euros (EUR) signed by Mr J.D. in the name of the defendant on 29 September 1998. The date of issue indicated on the promissory note was 1 October 1998.
On the basis of that note and four endorsements on it, the applicant company claimed to be the holder of the note and sought a judicial order for the defendant to pay the above-mentioned amount with interest and some additional associated amounts.
13.  On 17 February 2006, in summary proceedings, the District Court issued a payment order (zmenkový platobný rozkaz) for the amounts claimed. The defendant protested (námietky) and appealed (odvolanie), but the order was upheld in ordinary proceedings by, respectively, the District Court on 21 May 2007 and the Bratislava Regional Court (Krajský súd) on 28 April 2009.
14.  Both the District Court and the Regional Court held hearings at which the legal representatives of the parties and two witnesses were heard and documentary evidence as adduced by the parties was examined.
15.  The courts concluded that the promissory note had been validly issued in the name of the defendant by Mr J.D.; that, at the time of issue, the note had been incomplete as it had had no maturity date; and that its maturity date, 1 November 2005, had been added to it later.
The courts dismissed the defendant’s claims that the note had been issued for payment “at sight”, that it had accordingly been intended to be presented for payment within a year of its date of issue (section 34 of the Bills of Exchange, Promissory Notes and Cheques Act (Law no. 191/1950 Coll. – Zákon zmenkový a šekový) – “the Act”); and that, in the absence of such presentation, it had been statute-barred three years after its maturity date (section 70 of the Act).
The courts rather considered the note to be a blank promissory note, in which case the missing maturity date would be added later under an agreement entered into for that purpose, as envisaged by section 10 of the Act. Under that provision, in the circumstances, the only argument that the defendant could raise against the applicant company was that it had acquired the note in bad faith or that, in acquiring it, the applicant company had been guilty of gross negligence.
As regards the adding of the maturity date to the promissory note, the courts heard as a witness one of the previous holders of the note – A., who at the same time was an executive of another of the note’s previous holders. He submitted before the court that he had had an oral understanding with Mr J.D. about adding the maturity date to the note and that the date had accordingly been added to the note by another previous holder of the note.
The courts further noted that the contract under which the applicant company had acquired the promissory note contained a declaration by the previous holder that it had already acquired the note with the maturity date, and that the maturity date had been added to the note in compliance with the arrangements previously made.
In the courts’ assessment, the applicant company had acted in reliance on those assurances and it was up to the defendant to disprove them, which it had failed to do. It had equally failed to establish the other defences it had sought to rely on.
16.  As no ordinary appeal lay against the appeal court’s judgment, following its service on the parties, the matter was resolved with the force of a final and binding decision (právoplatnosť) on 8 June 2009.
17.  On 5 June 2009 the defendant filed a petition with the Office of the Prosecutor General (“the PG”) requesting the latter to exercise his discretionary power to challenge the above-mentioned judgments by way of an extraordinary appeal on points of law (mimoriadne dovolanie – “extraordinary appeal”).
18.  The PG decided to accede to the request and on 10 June 2009 he challenged the contested judgments in the Supreme Court (Najvyšší súd).
The PG relied on Article 243h § 3 of the Code of Civil Procedure (Law no. 99/1963 Coll., as amended – “the CCP”) (see paragraph 49 below), which provides that reasons for an extraordinary appeal may be submitted within sixty days of the introduction of the extraordinary appeal if there is the risk of considerable economic damage or other irreparable consequences.
In that respect, the PG argued that the contested judgments were directly enforceable and that the volume of the case file was extensive. The reasons for appealing would therefore be submitted later.
19.  At the same time, the PG requested that the enforceability of the contested judgments be suspended. Pursuant to Article 234ha of the CCP (see paragraph 50 below), by virtue of this request, the enforceability was immediately and automatically suspended, pending the Supreme Court’s decision to dismiss the request or, in the absence of such a decision, pending the outcome of the proceedings before the Supreme Court on the extraordinary appeal.
In support of his request, the PG submitted that the defendant, in which the State was a major shareholder, had been ordered to pay a large sum of money. If that sum were to be paid and if the Supreme Court were to allow the extraordinary appeal, it would give rise to a claim for repayment of unjustified enrichment in an equally significant amount. Such a claim would not be secured and its settlement would be uncertain and risky.
20.  In the absence of a decision on the part of the Supreme Court to dismiss the PG’s request, the enforceability of the payment order in the applicant company’s favour remained suspended until the PG’s extraordinary appeal had been decided on its merits (see below).
21.  Meanwhile, on 23 July 2009, the PG had submitted the reasons for his appeal.
22.  The main argument was that the courts had erred in the application of the law (especially section 10 of the Act) to the facts that were decisive for assessing whether the applicant company had acted with gross negligence in acquiring the promissory note, in particular in relation to adding the maturity date.
In the PG’s view, it had been grossly negligent of the applicant company to have contented itself with the declarations of the seller as to the existence of and compliance with the arrangements for adding the maturity date to the note (see paragraph 15 above in fine) without pursuing any proper enquiries. This was all the more so as it was generally known that the defendant had contested the notorious “promissory notes of Mr J.D.”, and that in view of the sum of money concerned the note in the present case was clearly outwith the ordinary course of business. Moreover, it was obvious how little the applicant company had paid to acquire the promissory note and the payment conditions were peculiar.
On the latter points, the PG submitted that the price payable for the promissory note by the applicant company was no more than 50 % of its nominal value and that 98.8 % of that price was payable only on collection of payment under the note. Those and other elements indicated that the transactions in respect of the note had been speculative in nature.
In the PG’s view, in those circumstances, the applicant company had been grossly negligent; the defendant was entitled to claim that there had been no valid arrangement for adding the maturity date to the promissory note; and it was up to the applicant company to show that such an arrangement had existed and had been complied with, failing which the note was payable “at sight,” and any claims based on it were statute-barred.
In the PG’s submission, requiring the defendant to show that no arrangement for adding the maturity date to the note had existed would amount to a probatio diabolica because the non-existence of a fact was not capable of being proven.
23.  On 4 September 2009 the applicant company submitted its observations in reply to the extraordinary appeal and to the defendant’s petition for that remedy. It disputed the PG’s arguments and submitted, inter alia, that the burden of proof in respect of the allegedly unlawful alteration of the note after its issuance rested solely with the defendant. The applicant company had been under no duty to enquire into the existence of and compliance with any arrangement for adding the maturity date to the note. In that respect, it emphasised that in judicial proceedings concerning promissory notes, the burden of proof in principle always rested with the issuer, and only with the issuer.
24.  On 12 May 2010 the Supreme Court, sitting in chambers, allowed the appeal, quashed the contested judgments and remitted the matter to the District Court for a new determination. It did so having in principle accepted the line of argument advanced by the PG and having noted, in particular, that the testimony of A. as regards the alleged understanding with Mr J.D. about the adding of the maturity date to the note had been contradicted by other evidence and was as such implausible.
25.  The Supreme Court’s judgment was served on the applicant company’s lawyer on 7 July 2010. As a result, the case was remitted to the first instance. The further course of the proceedings before the ordinary courts is described in paragraphs 31 et seq. below.
26.  On 6 September 2010 the applicant company challenged the Supreme Court’s judgment of 12 May 2010 in the Constitutional Court (Ústavný súd) by way of a complaint under Article 127 of the Constitution (Constitutional Law no. 460/1992 Coll., as amended).
The applicant company relied, inter alia, on Article 6 § 1 of the Convention and Article 1 of Protocol No. 1, invoking its rights to a fair trial, in particular access to a court, equality of arms, protection of property, as well as the principles of legal certainty and rule of law.
The applicant company argued that there was a systemic problem as the principle of the parties’ procedural equality had been breached by the mere existence of the extraordinary appeal proceedings. The dispute over the promissory note was of a commercial and as such private-law nature. Any room for interference by the State with judicial proceedings and final and binding decisions in such a dispute was therefore particularly narrow. The position in the present case was aggravated by the fact that the PG’s extraordinary appeal favoured the defendant, an entity in which the State had a majority interest.
In addition, the applicant company contested the application of the existing rules in its specific case, since the PG had interfered by extraordinary means with a final and binding judgment in the State’s favour. The applicant company pointed out the particular circumstances of the case, including the fact that the two lower levels of jurisdiction had determined the matter unanimously, that they had already dealt with the arguments that were subsequently reiterated by the PG, and that the re‑assessment of the case had involved not only questions of law, but also questions of fact. In conclusion, the interference with the final and binding judgment in favour of the applicant company had been without any acceptable justification.
Furthermore, the applicant company noted that the Government of the Slovak Republic had previously publically declared that what had been termed “[Mr J.D.]’s promissory notes” would never be honoured. In view of that declaration as well as the Government’s contractual obligation to indemnify investors in the defendant for any losses that they might incur on account of the promissory notes signed by Mr J.D (see paragraph 10 above), the extraordinary appeal had not served any greater good as envisaged by the applicable statute, but had rather served the Government’s political and economic interests. As the Supreme Court had not clearly distanced itself from those considerations, it could not be regarded as independent and impartial.
Lastly, as the quashed judgments had been final and binding, they had constituted possessions and their quashing was an interference with those possessions, in violation of Article 1 of Protocol No. 1.
27.  On 11 November 2010 the applicant company added further reasons to its constitutional complaint, relying on the Report on the Independence of the Judicial System adopted by the Venice Commission at its 82nd plenary session on 12 and 13 March 2010, with particular reference to the revision of judges’ decisions outside the appeals procedures (see paragraphs 58 et seq. below).
In addition, the applicant company pointed out the circumstances of the adoption of the amendment (Law no. 484/2008 Coll.) to the CCP allowing the reasons for extraordinary appeals to be added at a later date, and for such appeals to have “automatic suspensive effect”. In particular, the amendment had been adopted with retroactive effect and with the aim of reversing the outcome of a specific, albeit unrelated, dispute.
28.  On 26 April 2011 the Supreme Court, as the defendant to the complaint, submitted its observations in reply and, on 12 January 2012, the applicant company submitted a rejoinder.
29.  On 19 January 2012 the Constitutional Court declared the complaint inadmissible as being manifestly ill-founded.
It observed that the statutory framework for the examination of individual complaints did not allow it to examine the compliance of statutes with the Constitution and international instruments as such. It could therefore only review the application of the existing statutory rules in the applicant company’s individual case.
It also observed that the statutory provisions on extraordinary appeals were an integral part of the legal system of Slovakia and that there was a presumption of their constitutionality. It further noted that the PG had no power to lodge such an appeal of his or her own motion, but could only do so following the filing of a petition by those concerned, on grounds strictly defined by the CCP and within the time-limit prescribed by it.
In the present case, the PG’s extraordinary appeal had been prompted by a petition by the defendant and it had relied on appropriate grounds.
In that regard, the Constitutional Court noted that the extraordinary appeal was concerned with the distribution of the burden of proof, which was a preliminary but crucial matter in the case at hand. On the facts, it was determinative for its outcome in that, in the event of a failure to establish the given elements of the case, the party upon which the burden of proof rested would automatically lose it.
The Constitutional Court also noted the Supreme Court’s finding that the rigidity of the lower courts’ interpretation of the statutory premise that the burden of proof in this type of case rested on the issuer of the promissory note had been arbitrary and one-sided, and that its effects had suppressed the object and purpose of the CCP and the Act.
Thus, in the Constitutional Court’s assessment, the extraordinary appeal had not been motivated merely by a differing legal view but rather by an error of procedure. It thus satisfied the requirements of the Convention for an acceptable interference with an adjudicated matter.
As to the merits of the case, the Constitutional Court noted that it was not a court of further appeal against decisions of the ordinary courts. It found the reasoning of the Supreme Court congruous and convincing, and found no constitutionally relevant unfairness, arbitrariness or irregularity in the proceedings.
Furthermore, the Constitutional Court drew a distinction between the PG, who had lodged the extraordinary appeal, and the Supreme Court, which had decided on it, finding no grounds to doubt the Supreme Court’s independence and impartiality. In any event, it had been open to the applicant company to challenge any of the Supreme Court’s judges involved in the case for bias, which it had not done.
As to equality of arms, the Constitutional Court noted that the applicant company had had – and had amply used – the opportunity to present its views as regards the extraordinary appeal, and found that the applicable guarantees had been respected.
As regards the applicant company’s property claim, the Constitutional Court reiterated its established case-law, pursuant to which a general court could not bear “secondary liability” for a violation of fundamental rights and freedoms of a substantive nature unless there had been a constitutionally relevant violation of the rules of procedure. However, no such procedural issue had been established.
30.  The Constitutional Court’s decision was served on the applicant company’s lawyer on 16 February 2012. It was not amenable to appeal.
31.  Following the quashing of the judgments of 21 May 2007 and 28 April 2009 by the Supreme Court on 12 May 2012, the case was remitted to the District Court for re‑examination in the light of the principles set out by the Supreme Court.
32.  The action was thus re-examined and again dismissed at first instance by the District Court on 29 October 2012 and, following an appeal lodged by the applicant company, by the Regional Court on 19 September 2013.
33.  The District Court held a hearing and new evidence was taken. Having examined the evidence and in view of the legal opinions expressed by the Supreme Court, the court concluded that the applicant company had been mala fides in acquiring the promissory note, and that it had failed to show that the note had been issued as a blanket note or that any arrangement had been made for adding a maturity date to it. Thus, the note had been payable “at sight” and any claims based on it were statute-barred.
34.  Following service of the written version of the Regional Court’s judgment on the parties, the dismissal of the action became final and binding on 23 October 2013.
35.  In another case the applicant company sued the same defendant for payment under another promissory note, also issued by Mr J.D. on behalf of the defendant on 1 October 1998. The note was for the same amount as in the present case and the relevant circumstances were similar.
36.  Following the applicant company’s action, a payment order was issued on 6 March 2006. However, it was then quashed on 21 May 2007 following a protest by the defendant. The latter decision was upheld on 29 January 2008 following an appeal lodged by the applicant company.
37.  The applicant company subsequently twice petitioned the PG to challenge by way of an extraordinary appeal the judgments quashing the payment order and dismissing its appeal. Among other things, it referred to the PG’s extraordinary appeal of 10 June 2006 in the present case (see paragraphs 18 et seq. above) and submitted that the judgments mentioned in the preceding paragraphs contained the same structural and technical flaws, save for the outcome, which that time had been to the applicant company’s disadvantage.
38.  In a letter of 5 October 2010 the PG informed the applicant company that its repeated petition had ultimately been dismissed.